Our Bureau

Mumbai, Feb. 14

HINDUSTAN Lever Ltd (HLL) today reported a better than expected 22.65 per cent rise in profit after tax, but before exceptional items, for the quarter ended December 31, 2005, at Rs 438.5 crore from the previous corresponding Rs 357.51 crore.

Higher sales, cost initiatives and focus on market share growth aided HLL's profit upturn.

With exceptional items of Rs 82.36 crore included, the company's Q4 net profit was up 56.1 per cent to Rs 520.86 crore (Rs 333.67 crore).

Strong volume sales helped the company return to double-digit topline growth.

Net sales for the quarter moved up 14.36 per cent to Rs 2,974.33 crore (Rs 2,600.83 crore) while there was a 29.87 per cent dip in other income to Rs 64.2 crore (Rs 91.55 crore).

Q4 advertising and promotions expense was up 49.7 per cent at Rs 265.37 crore (Rs 177.27 crore).

Growth was broad-based across most categories, helping seven per cent volume sales, Mr D. Sundaram, Director - Finance, HLL, said.

For the year ended 2005, HLL's net profit, including exceptional items of Rs 53.59 crore, was up 17.6 per cent at Rs 1,408.1 crore (Rs 1,197.36 crore) on 11.42 per cent rise in net sales to Rs 11,060.55 crore (Rs 9,926.95 crore).

Full year advertising and promotions expense moved up by 20.3 per cent to Rs 1,005.67 crore (Rs 835.98 crore).

Q4 exceptional items comprised Rs 89.2 crore as profit on transfer of Doom Dooma and TEI plantation divisions to subsidiaries; Rs 43.7 crore as profit on disposal of trade investment; Rs 23.2 crore as one-time reduction in tax liability due to integration of TOCDL (an erstwhile subsidiary) with HLL; Rs 25.3 crore as provision towards impairment of tangible/intangible assets of a business; Rs 32.4 crore as provision for diminution in value of investments in subsidiaries/joint ventures; Rs 10.2 crore as costs arising from termination of sourcing arrangement; and Rs 6.1 crore as compensation under VRS.

Buoyed by good performance, HLL shares moved up 7.16 per cent to Rs 224.45 on the BSE.

In its statement, HLL pointed out that given the integration of several subsidiaries and the transfer of Doom Dooma and TEI plantations divisions to subsidiaries, the results of the fourth quarter and that of the year are not comparable to previous corresponding times.

Adjusting for the same, the company has cited a 52.14 per cent growth in Q4 net profit to Rs 507.4 crore (Rs 333.5 crore); a 19.03 per cent gain in PAT to Rs 425.3 crore (Rs 357.3 crore) and a 13.86 per cent rise in net sales to Rs 2,937.8 crore (Rs 2,580.2 crore).

For the whole year, the adjusted figures pointed to a 15.11 per cent increase in net profit to Rs 1,375 crore (Rs 1,194.5 crore) on an 11.18 per cent gain in net sales to Rs 10,973.4 crore (Rs 9,869.7 crore).

The company returned to double digit growth after six years.

The company's board has recommended a final dividend of Rs 2.50 per equity share of Re 1 for 2005, which together with the interim dividend of Rs 2.50 gives a total dividend of Rs 5 for the year.

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(This article was published in the Business Line print edition dated February 15, 2006)
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